This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.nytimes.com/2012/10/02/business/global/unemployment-in-euro-zone-rose-to-new-high-in-august.html

The article has changed 4 times. There is an RSS feed of changes available.

Version 1 Version 2
Unemployment in Euro Zone at Record High Unemployment in Euro Zone at Record High
(about 4 hours later)
PARIS — The euro zone’s jobless rate rose to record levels this summer, official data showed Monday, underscoring the pain inflicted by the slowing world economy and the euro crisis on citizens of the world’s largest market. PARIS — New data Monday showing record jobless rates in the euro zone underscored the pain inflicted by the slowing world economy and the financial problems plaguing many of the countries that share the euro currency.
Unemployment in the 17-member euro zone rose to 11.4 percent in August, Eurostat, the statistical agency of the European Union reported from Luxembourg. The agency also revised up the figure for June and July to 11.4 percent from the previously reported 11.3 percent, already a record. Unemployment in the 17-member euro area rose to 11.4 percent in August, Eurostat, the statistical agency of the European Union, reported from Luxembourg.
The unemployment rate for the 27-member European Union came in at 10.5 percent in August, unchanged from July. The agency estimated that there were more than 25 million people out of work in Europe, including more than 18 million in the euro zone. Eurostat revised up the July figure from 10.4 percent. The agency also revised the figure for June and July to 11.4 percent, up from the previously reported 11.3 percent, which was already a record level for the region since the introduction of the euro in 1999.
“It is clearly unacceptable that 25 million Europeans are out of work,” a European Commission spokesman, Jonathan Todd, told a regular news briefing Monday. The jobless numbers, which compare with the August rate of 8.1 percent in the United States, suggest that Europe’s recession is deepening, despite the continued efforts of policy makers and finance ministers to cure the region’s malaise.
Austria had the euro zone’s lowest jobless rate, at 4.5 percent. Spain continued to have highest, at 25.1 percent, with 52.9 percent of people under 25 years old being classified as unemployed. Unemployment in Greece and Spain, currently the euro zone’s most economically troubled members, reached new euro-era highs. And as both countries move ahead with plans for even tougher austerity budgets — Greece to appease its international creditors, Spain to potentially clear the path for European aid — their job outlooks could worsen further.
The European jobless numbers, which compare with the official August rate of 8.1 percent in the United States, suggest that Europe’s recession is still deepening. Visiting Madrid on Monday, Olli Rehn, the European commissioner for monetary affairs, said Europe stood “ready and willing” to act in response to a possible bailout request from Spain.
That impression was strengthened by Markit Economics’s purchasing managers’ index, which confirmed an initial report showing euro zone production declining in September for a seventh consecutive month. Greece had an unemployment rate of 24.4 percent in June, the latest month for which data were available.
Jennifer McKeown, an economist with Capital Economics in London, noted in a report that data show that while the economic strain is being felt most heavily at the “periphery” of the euro zone, in places like Spain and Portugal, “the situation is bad in the core too,” with the French jobless rate at 10.6 percent. Last week the government said the number of jobless had passed 3 million, the first time since 1999. Spain, meanwhile, still had the region’s highest jobless rate, at 25.1 percent over all, and an even bigger problem among young people. Nearly 53 percent of Spaniards under age 25 were classified as unemployed in August.
The data Monday “suggest that the industrial sector is experiencing a sharp downturn,” Ms. McKeown wrote, “and with unemployment at a record high, the outlook for the consumer sector is gloomy, too.” “Youth unemployment, especially if prolonged, threatens to harm the self-esteem and economic potential of young people now and in the future,” Jonathan Todd, a spokesman for the European Commission, said in a statement Monday after the release of joblessness figures.
She estimated that euro-zone gross domestic product would shrink by 2.5 percent next year. “This could also pose a serious threat to social cohesion and increase the risk of political extremism,” he said. “E.U. institutions and governments, businesses and social partners at all levels need to do all they can to avoid a ‘lost generation,’ which would be an economic and social disaster.”
European stock markets were higher in midafternoon trading. The Euro Stoxx 50, a barometer of euro zone blue chips, was up 1.27 percent, and national markets were up between 1 percent and 2 percent. The FTSE 100 index in London was up 1.26 percent. Reinforcing the dismal data, the Markit Economics purchasing managers’ index on Monday confirmed an initial report showing that euro zone industrial production declined in September for a seventh consecutive month.
The euro was at $1.2929, up from $1.2880 late Friday in New York. Jennifer McKeown, an economist with Capital Economics in London, noted in a report that while the economic strain was being felt most heavily at the “periphery” of the euro zone, in places like Spain and Portugal, “the situation is bad in the core, too,” with the French jobless rate at 10.6 percent. Last week the government of France said the number of jobless people had passed three million for the first time since 1999.
James Kanter contributed reporting from Brussels. The data Monday “suggest that the industrial sector is experiencing a sharp downturn,” Ms. McKeown wrote, “and with unemployment at a record high, the outlook for the consumer sector is gloomy, too.” She estimated that the gross domestic product of the euro zone would shrink 2.5 percent next year.
Mr. Rehn, of the European Commission, met Monday with the Spanish prime minister, Mariano Rajoy, and the economy minister, Luis de Guindos, but refused to speculate afterward whether the Spanish government would be pushed into asking for more European help to meet its debt financing obligations.
Still, Mr. Rehn urged Madrid to make further efforts to overhaul its economy, saying that “Spain must continue the reform of its pensions system,” as well as align the retirement age more closely to today’s longer life spans.
Mr. Rehn’s visit came after the Spanish government last week presented a budget for 2013 that would include additional spending cuts. Spain had also released an independent assessment of its troubled banking sector, estimating that the biggest Spanish banks would need as much as €59.3 billion, or $76.5 billion, in additional capital.
In June, euro zone finance ministers agreed to make available as much as €100 billion to help prop up Spanish banks. Spanish officials indicated late last week that they might soon request around €40 billion of that money.
Mr. Rajoy also has been weighing, since early September, whether to tap into a new bond-buying program announced by the European Central Bank. His hesitancy stems from concerns that European lenders would require Madrid to make even deeper cuts than those foreseen in his latest budget proposal.
His plan for 2013 estimates debt interest payments of €38.6 billion next year, almost €10 billion more than what was budgeted for 2012, and underlining the extent to which Madrid faces borrowing costs that many economists consider to be unsustainable.
Alfredo Pastor, a professor of economics at the IESE business school in Barcelona, said Monday that “it is the adequate moment to ask for a bailout and lower interest payments on the debt.”
So far, Mr. Rajoy seems intent on buying time, hoping that Spain’s borrowing costs remain relatively stable in the debt markets. That could enable his government to delay or avoid asking for help from the E.C.B. bond-buying program, whose main purpose would be to help keep a lid on the interest rates that investors demand to hold Spanish debt.
Madrid’s release of the 2013 budget last week seems to have temporarily eased pressure on Spain’s 10-year bond yield, or interest rate. After cresting above 6 percent at one point last week, on Monday it was trading at 5.83 percent.
But Spain’s debt challenges are not likely to go away soon. In addition to the budget problems of the central government, 17 regional governments are also struggling to meet deficit targets.
During the weekend, the government in one of the most troubled regions, Castilla-La Mancha, which is controlled by Mr. Rajoy’s own Popular Party, presented a 2013 budget that would replace salaries of regional lawmakers with per diem payments for time spent in the area’s Parliament.
Raphael Minder reported from Madrid. James Kanter contributed reporting from Brussels.